Revealed: The Fair market value (FMV) of every Premier League club’s sponsorship
The Sponsor has today released its Sponsor Power Index, a comprehensive study of the fair market value (FMV) of every Premier League club’s shirt sponsorship.
Fair market value in sponsorship refers to the income a team or event can expect to receive for their sponsorship on the open market, without any existing business connections. It is determined by evaluating the actual sponsorship fees received by teams and events with a stronger or weaker sponsorship offering.
How do we determine what constitutes a better or worse sponsorship opportunity?
Well, at The Sponsor we constantly publish interviews with marketing leaders from brands such as DHL, Qatar Airways, BMW to get their best tips and advice and hear what they look for in a sponsorship opportunity. Using these insights we built a scorecard of key sponsorship measures called our RAC Scorecard. The scorecard evaluates each club's Reputation, Awareness and Contribution to society, something that is becoming increasingly important in the decision-making of sponsors when selecting a partner.
According to most sponsors, when considering reputation, a strong sponsorship partner is a team or event that has a long history of success and quality, it’s a property that is considered culturally relevant and innovative. When considering awareness, it’s a property that has a large reach, a diverse and wealthy audience and most importantly, an audience that is highly engaged with content relating to the team or event in question. Finally, when considering contribution, it's a partner that supports its community through charitable endeavours, improves the fan experience, helps to develop the wider game and is at the very least considered environmentally responsible.
Using this scorecard, we measured the strength of every Premier League team's sponsorship by drawing on a wide number of data points. Metrics included but were not limited to: on-pitch performance, social following, digital presence, TV viewing, audience demographic and behaviour data, ticket pricing, ticket pricing change in a cost of living crisis, charitable donations, environmental assessments, support of the women's and grassroots game and more.
Using each club's RAC sponsorship score together with real-world sponsorship deals as reported by The Athletic our analytics team conduct a logistic regression analysis to determine the true and fair value of each club's sponsorship. Here are the results:
Treble Winning Manchester City’s Shirt Sponsorship Valued at a record £72.8m
The standout finding of the research is the record-breaking £72.8 million valuation of treble-winning Manchester City's sponsorship, up from their reported £67.5 million-a-year current deal with Etihad. That deal expired in 2021 but has continued each year until the club can find a partner willing to meet the valuation.
“The value Manchester City brings to a commercial partner is not limited to their on-pitch success. Our data shows the club’s value is underpinned by its cultural relevance and reputation for innovation as well as the ways in which it engages with fans and provides a positive return to the community, to the development of the game and to society as a whole. These are all key considerations for sponsors seeking to gain brand awareness and enhance their image.”
Newcastle United’s sponsorship value increased by 78% but still falls way below its new £25m deal with Sela.
The fair market value of Newcastle United has been calculated at £17.4m which is £7.6m shy of the club’s new sponsorship deal with Saudi-backed events company Sela, raising more questions about the legitimacy of the deal.
The club's qualification for the prestigious Champions League has undoubtedly had a substantial impact, driving a remarkable 78% increase compared to their previous partnership with Fun88. However, Newcastle United still faces challenges in areas such as cultural relevance, engagement, and contributions to society, which have limited their overall sponsorship potential.
Such a well-rounded sponsorship offering does not happen overnight, and a case will be made to the Premier League that the multi-year deal with Sela is as much an investment in the club’s future as its present.
Until Newcastle United can develop its brand off the pitch and offer sponsors more than just brand awareness, it will have to be content with the role of ‘best of the rest’.
Manchester United’s sponsorship with Team Viewer undersold by £12.2m per year.
The fair market value of Manchester United’s sponsorship has been revealed as £54.5m exposing the significant extent to which the current deal with Team Viewer was undersold.
The club is currently seeking a new commercial partner to replace the German software company whose investors described the initial sponsorship decision as showing “appalling judgement”. While the previous £65m a year deal with Chevrolet may be difficult to repeat Manchester United should be commanding a much higher fee from any new sponsor.
No club scores higher than Manchester United in The Sponsor’s analysis in terms of longevity and history of their success. For brands wishing to highlight their own history and quality to a global audience of football fans, there is no greater partner.
Manchester United has long had a strong reputation which has enabled the club to weather the storm of the last 10 years. Now with improved performances and Champions League qualification under Erik Ten Hag, the club can once again legitimately command the highest sponsorship fees in the league.
West Ham’s Europa Conference League Victory generates an additional £7.1m in annual sponsorship value.
More good news for West Ham United as their remarkable victory in the Europa Conference League has brought both silverware and a significant financial boost. The club's triumph in the tournament has generated an impressive £7.1m in additional annual sponsorship value, further enhancing their commercial success.
The triumph adds a shining chapter to the club's history increasing their perceived quality within the footballing world. These increased reputational scores coupled with strong scores for contribution to society make the club an attractive partner for potential sponsors.
Moreover, West Ham's European qualification resulting from their triumph in the Europa Conference League has ensured another year of heightened brand awareness. Competing on the European stage offers valuable exposure and opportunities for the club and its sponsors to showcase their brands to a wider audience. This extended presence on the continental stage opens doors for potential sponsorship deals and partnerships, enabling West Ham to forge stronger connections with both local and international brands.
The club’s current deal with Betway reported to be in the region of £10m per year, is not due to expire until 2025. However, if on-the-pitch success continues Betway may face having to stump up significantly more investment or risk losing a premium sponsorship asset to another brand.
Chelsea’s fair market sponsorship value plummets by almost 60%.
Chelsea’s season to forget has had a significant impact on the club’s ability to attract and retain high-value sponsorship in an already economically difficult and competitive market. Last season’s disastrous campaign could not have come at a worse time as the club’s deal with Three comes to an end leaving Chelsea searching for a new partner.
The failure to secure any form of European football next season means brands sponsoring the club will be seen by significantly fewer people than in previous seasons. This reduction in available brand awareness reduces the fair market value of Chelsea to £16.9m, well below the £40m Three was prepared to pay. Manchester United are also looking for a new front-of-shirt partner and currently, their proposition offers sponsors more brand awareness in the coming season.
Chelsea’s only negotiating hand is to fall back on their existing brand reputation which includes high scores for cultural relevance, innovation, and history. Only Manchester City and Manchester United have a stronger social following. Chelsea also leads the pack when it comes to social contribution donating £6.5m through its foundation, considerably more than any other Premier League club.
As Chelsea themselves have already shown, nothing in football is guaranteed regardless of how much you spend on players. If any new sponsor is willing to pay above the fair market value to sponsor the club, they will be taking a gamble that last season was just a blip for a club that is typically a Champions League mainstay.
Nottingham Forest holding out for £10m shirt sponsorship despite fair market valuation showing the true value to be just £3.9m.
Nottingham Forest’s search for a £10m a year sponsor may be a long one as the club’s fair market assessment shows a valuation of £3.9m with only Luton Town scoring lower.
All Premier League teams command a significant sponsorship fee due to the resulting brand awareness and viewership of the league. However, the competition among Premier League clubs to secure those sponsorship fees in a difficult economic climate is fierce.
When benchmarking Nottingham against its Premier League peers the club is bottom of the pile in almost all measures. When considering engagement amongst the fan base, for example, Nottingham Forest has one of the lowest social media followings, only newly promoted Burnley, Sheffield United and Luton Town score worse. The situation is compounded by a lack of star power amongst the club’s current player roster when compared to competing clubs boasting the likes of Pickford, Zaha and Diego Costa with his 7 million followers.
The club’s poor form continues when considering its contribution to the community with low scores for its charitable donations and environmental scores, something which is increasingly important to potential sponsors.
On the pitch, Forest finished the season strongly but despite flirting with the excitement of relegation no club was picked for less television coverage than Nottingham Forest’s 11 games against the Premier League average of 32.
“Nottingham Forest’s Premier League survival is a continuation of the club’s impressive upward trajectory. However, until off-the-field performance can be brought up to the level of other Premier League teams then the club’s £10m sponsorship valuation appears to be an unrealistic one”.
European Sponsorship boost for Brighton and Aston Villa while Liverpool and Tottenham suffer.
European qualification has provided a welcome boost in the fair market value of Brighton and Aston Villa with each club’s front-of-shirt sponsorship value increasing to £12.5m and £11.1m respectively.
For Brighton’s sponsor, American Express, who signed a 12-year deal in 2019 reportedly valuing annual shirt sponsorship at £8m, the valuation is a reward for their long-term investment in the club.
Aston Villa on the other hand is well placed to take advantage of their sponsorship valuation with the club’s current deal with Cazoo set to expire this summer. Using West Ham’s European football success as a case study, Aston Villa can offer sponsors far greater brand exposure than many of their Premier League rivals.
For every winner, there is a loser. Tottenham’s failure to qualify for any European competition means they will deliver significantly less value to long-term sponsor AIA than in previous seasons. Spurs' fair market value going into the 2023/24 season is £26.9m, well below the reported £40m annual payment made by AIA.
Liverpool’s long-running sponsorship deal with Standard Chartered nets the club a reported £50m a year; the club’s fair market value for the season ahead is £12.2m shy of this figure.
Despite a poor season, Standard Chartered will remain content that value from the partnership is still being delivered. Liverpool scored highest in terms of cultural relevance thanks to a strong social following, relationship with fans and star power, helped in no small part by the continued presence of global icon Mo Salah. These scores combined with Liverpool’s strong reputation for history and success will alleviate any sponsorship concerns.
Conclusion
The Nottingham Forest example goes to show why fair market valuations are so important. Sponsors who fail to undertake one can easily be swayed by the emotional pull of seeing your logo on the front of a Premier League team's shirt but increasingly in the world of sponsorship where marketing budgets are under greater scrutiny than ever the head must take over the heart. Sponsorship decisions must be made with reasoned logic, not impulse.
Notes:
The research methodology takes a point-in-time valuation as of 23:59 on 11th June 2023 and does not seek to forecast or predict the future performance of teams as it relates to European qualification or relegation. Consequently, sponsors and clubs may place a higher or lower value on the sponsorship due to their own predictions of future performance. Unlike sponsors and clubs, The Sponsor is an independent valuer with no vested commercial interest in the outcomes of the research.
